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Posted October 5, 2012 12:03 am

THE ASSOCIATED PRESS

Deal signed to reopen coal power plant near Denali

FAIRBANKS — A dormant coal-fired power plant near Denali National Park could be back on line within two years under a deal signed by the state of Alaska, a Fairbanks utility and the federal Environmental Protection Agency.

Golden Valley Electric Association agreed to buy the Healy Clean Coal Plant from the state for $50 million and to install new pollution controls at a cost of another $40 million.

GVEA Interim President Cory Borgeson told the Fairbanks Daily News-Miner (http://bit.ly/QTs8BC ) that the power cooperative also expects to spend $20 million to make the plant operate safely and it will advance by two years the addition of pollution control equipment on a second power plant in the area, Healy No. 1.

GVEA also will contribute $250,000 for a wood stove upgrade program in the Fairbanks North Star and Denali boroughs and $115,000 to the EPA to underwrite federal expenses during negotiations.

The agreement is a step toward obtaining an air quality permit for the plant.

GVEA wants to generate power from the plant and move away from expensive oil-fired generation.

Consultant Kate Lamal, who previously worked on the issue at the utility, said the plant’s location a few miles from a northeast border of Denali Park factored into the EPA demand for added pollution controls.

“That had everything to do with it,” she said.

The EPA agreed to allow GVEA to operate the plant for up to 18 months before new pollution controls are installed to give the utility time to fine-tune its operations.

Borgeson called the concessions a “fair deal.” Costs associated with the upgrades are far cheaper than building a new power plant, he said.

Environmental groups have opposed reopening the coal-fired power plant.

The Alaska Department of Environmental Conservation issued an air quality permit for the plant in February and the Northern Alaska Environmental Center and three other groups asked the EPA for scrutiny of the permit.

Groups will have at least 30 days to comment on the new agreement after it’s published in the Federal Register, Borgeson said.

“We think they may find this acceptable,” Borgeson said.

The technology behind the $300 million power plant used an experimental process to burn low-grade coal. It operated intermittently in 1998 and 1999.

The plant was shuttered in 2000 because of safety and reliability concerns and has been closed since then. Borgeson said the $20 million in startup and upgrade costs will address the safety concerns.

David Arnold, director of the Northern Alaska Environmental Center, told The Associated Press on Thursday he was relieved to see pollution control requirement required but that it should be in place during startup, when most pollution is spewed. The controls likely would not have happened if environmental groups had not intervened, he said.

He has not seen the consent agreement but is disappointed with the overall outcome.

“Primarily we feel the long-term negative consequences of coal as an energy source outweigh any short-term economic benefits,” he said.